Merck & Co., Inc. (MRK): The Foundations of the Pharmaceutical Industry

As there was no FDA in those days to regulate any wild claims of efficacy, both Lees would go to great lengths to proclaim their ability to cure all manner of ills. H. P. Lee, in one 1803 advertisement, claimed that his New-London Bilious Pills (“Interesting to all sea-faring People”) had “extraordinary virtues in preventing and removing all those complaints which arise from bilious redundancies in the stomach and bowels.” The advertisement goes into more than half a page of detail on the various ailments the Bilious Pills could purportedly cure. If the people of those days had known of disco fever or boogie-woogie flu, these pills probably would have claimed to cure those, too.

Today, the pharmaceutical industry is a bit more discerning in its claims, a fact reflected in the industry’s rather small share of total patents obtained in the U.S. Between 2004 and 2008, pharmaceutical companies obtained roughly 13,600 patents, or 47 patents for every 1,000 people employed in the industry. This total significantly lags the patents obtained by many high-tech industries, which combined for more than 206,000 patents across a variety of enterprises. This discrepancy is reflected by the Intellectual Property Owners Association’s list of the top 300 patent-receiving organizations: in 2011, Abbot Laboratories (NYSE:ABT) was the top pharmaceutical company on the list, ranking 76th out of 300 with 419 patents. Merck & Co., Inc. (NYSE:MRK) came in at 96th with 302 patents, and no other pharmaceutical company managed to crack the top 100.

The article The Foundations of the Pharmaceutical Industry originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool has no position in any of the stocks mentioned.

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